Firms that are truly boosting profitability aren’t just raising rates; they’re reengineering how they charge.
AEC firms across the country are raising rates, but many are missing a bigger opportunity: rethinking their fee structure. According to Zweig Group’s 2025 Fee & Billing Report, every firm surveyed increased billing rates over the past three years – with a median rise of 11 percent. But the firms that are truly boosting profitability aren’t just raising rates; they’re reengineering how they charge.
Fee structure is your secret weapon.
Think two firms charging the same hourly rate will see the same results? Think again. The difference often comes down to strategy. Firms that win sole-source contracts – those awarded without a fee competition – tend to outperform their peers. Why? They leverage trust, reputation, and relationships, sidestepping price wars and reinforcing their value.
Others are charging for urgency, with 37 percent of firms applying an “emergency” markup of 15 percent for rush work. It’s a simple but powerful adjustment that ensures margins don’t shrink under pressure.
Which pricing models pay off?
Not all fee methods are created equal. AIA Work-on-the-Boards survey data shows that percentage-of-construction-cost fees are considered the most profitable by nearly half of participating firms. As project values increase, so does the firm’s revenue – without renegotiating fees mid-project. By contrast, fixed fees and hourly contracts often limit upside and expose firms to risk if scope shifts.
This insight should prompt every firm to assess whether their current pricing model is maximizing revenue or simply maintaining the status quo.
When you get paid matters.
In addition to how you charge, when you get paid can dramatically impact your firm’s financial health. The data from Zweig Group’s 2025 Fee & Billing Report shows that most firms still bill conservatively in early phases – only 23 percent of a project’s fee is typically collected by the end of schematic design, and 25 percent by the end of design development.
That means more than half of the project’s fee comes later – when project risks increase and upfront work has long been delivered. “Back-dragging” fees in this way limits cash flow and exposes firms to nonpayment if the project is delayed or scaled back.
“Front-loading,” on the other hand, shifts more of the fee to early phases where critical strategic work is done. Firms that allocate more fee to upfront design, alignment, and scope definition are seeing better predictability, improved client communication, and fewer surprises downstream.
Adapting fee allocation to reality.
Top-performing firms don’t follow legacy fee splits. Instead, they adjust allocations based on client type, project risk, and real-time effort. They build flexibility into their contracts – adding rush premiums, scope-change clauses, and milestone billing options that protect both sides.
And they make it a habit. Today, 95 percent of firms review and update their billing rates at least once a year, up from 83 percent just one year ago. It’s part of a larger shift: fee planning is no longer a static task. It’s a strategic, dynamic business discipline.
Ready to shape the future of fee strategies?
Don’t wait until your next project burns a hole in your margin. For Florida firms, take this short survey and see how your fee-setting strategies stack up. Survey results debut at the AIA Florida 2025 Convention & Trade Show taking place at the JW Marriott Tampa Water Street, July 30-August 2. Learn more about the convention classes and schedule, and register to join us here.
Will Swearingen is senior director of Transition consulting at Zweig Group. Contact him at wswearingen@zweiggroup.com.
